Smartwatch Sales Take Off

Only a short time ago, many people dismissed smartwatches as overpriced and unnecessary. But according to a report from research and analytics company the NPD Group, smartwatch sales have “regained momentum in the U.S. market.” So much so that NPD predicts “U.S. smartwatch ownership will surpass that of the cheaper and more ubiquitous activity tracker by the end of 2020.” This, despite the fact that, according to the NPD Connected Intelligence Wearables Industry Overview and Forecast issued last December, “smartwatch owners paid an average price nearly 2.5 times that of activity tracker buyers.” NPD says that while the growth is being driven by the Apple Watch, there will be a ripple effect and all smartwatch brands will be more in demand.

One year ago, at the beginning of 2017, U.S. adults owned more than 43 million activity trackers—more than double the number of smartwatch owners. NPD says, given the price differential and the fact activity trackers boasted longer battery life than smartwatches, this was to be expected.

The changing smartwatch

NPD also cites the “growing pains that plagued the smartwatch” as another reason sales lagged. The bulky design of older smartwatches turned many consumers off, especially since activity trackers had much slimmer designs.

Also contributing to the increased popularity of the smartwatch is what used to be considered a deterrent—it’s more sophisticated than an activity tracker. Consumers, says NPD, now want “more sophisticated use cases with features, such as intelligent health and fitness tracking, as well as easy-to-use notifications and messaging.” Plus, many consumers look to their wearables to be a control hub, from which they can run their home automation systems. Since activity trackers can’t do that—many owners are making the switch and buying a smartwatch.

Smartwatch sales

By the end of last year, NPD says Apple likely sold nearly 17 million Apple Watches in the U.S. alone. As a result of activity tracker users switching to smartwatches, NPD predicts we’ll see more basic—and cheaper activity trackers introduced into the market. These will likely, due to their low cost, sell well.

In Q1 of 2015, of the people who owned wearables 17% owned a smartwatch and 83% owned an activity tracker. By the end of last year, 38% were smartwatch wearers, while 62% wore activity trackers. The real change will occur, forecasts NPD, by the end of 2019, when 48% of wearable owners will use smartwatches, and 52% will still be using activity trackers.

If you want to prepare for the smartwatch boom, you can find them on Alibaba.com here and here. If you’re looking for activity trackers, look here.

Rieva Lesonsky is CEO of GrowBiz Media, a media and custom content company focusing on small business and entrepreneurship. Email Rieva at rieva@smallbizdaily.com, follow her on Google+ andTwitter.com/Rieva, and visit her website, SmallBizDaily.com, to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.